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Old 01-11-2020, 11:51 AM   #81
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Originally Posted by Looking4Ward View Post
After close to 6 years of ER, I find myself in the situation where roughly half my portfolio is after-tax and comprised primarily of Wellington, and the other half in tIRA where again it's mostly Wellington.

I made the mistake (to me) of focusing on dividends and CG distributions in the first couple of years of ER and not on total return. While they were almost enough on their own from my after tax account to cover expenses, that is no longer the case and now they are threatening my ACA subsidies.

On the flip side, I'm considering purchasing a home in three years and will attempt to secure a mortgage with 30-40% down. The dividend and CGD's help qualifying because they show up on tax returns and I will also start to convert $60-$100K of my tIRA to a Roth and those distributions will also add as income to help qualify for a mortgage.
One further idea I have is that lowering your dividends and CG distributions would give you more room to convert to a Roth while showing the income for your loan. You could possibly get ACA subsidies some years, qualify for a mortgage, and get more money into the tax free Roth account. Three time winner. The loss would be the CG tax on selling Wellington now. The biggest factor is whether you want to stay with Wellington long term, or if other alternatives are just as good for you.

So I know that I will totally lose ACA subsidies for a couple of years while I do that. And the more I think about it the more it becomes clear ACA may complicate things more than it's worth.

5 years to Medicare and it won't be an issue for me anymore.
And that's perfectly fine. You've got the data to consider your options, and if you decide to stick with Wellington, that's your business. Showing the options was all I was trying to do in this thread, not the other things I was unfairly accused of doing, by people who seemed to think there were no options.
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Old 01-11-2020, 12:42 PM   #82
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Originally Posted by Looking4Ward View Post
So I know that I will totally lose ACA subsidies for a couple of years while I do that. And the more I think about it the more it becomes clear ACA may complicate things more than it's worth.
Got it. Obviously there is more to financial planning than just ACA subsidies and such, but depending on circumstances (and tax rates) it may be advantageous to make a bunch of moves that generate ACA MAGI into one year so the subsidy is only lost for one year. Of course, it also depends on what it does to your marginal tax rates and whether the additional taxes would be considerably more than the subsidies you are receiving. If it kicks too much income into a higher bracket then, as you said, maybe do it over two years.

Originally Posted by homestead View Post
Look at Vanguard Tax-Managed Balanced Adm VTMFX, no capital gains were paid last year.
Good fund for the right situation. When my mom was alive I had her taxable Vanguard account heavily invested in this. Just remember that it generates tax-exempt (muni bond) income which is included in MAGI. (Not as much as a taxable bond fund, of course, since there is less interest income all else being equal.) And as it is roughly a 50/50 AA, half the fund holdings generate said bond interest.
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 01-14-2020, 04:28 PM   #83
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My wife and I were in a similar situation a few years back -- our income(MAGI) was about 80K and we needed to get it to a little over 62K to qualify for a ACA deduction -- We ended up qualifying for two years by using the various front page deductions available to reduce our MAGI -- as it turns out we ended up with a MAGI of about 59K and saved a couple of grand thanks to the ACA credit. The deductions we used were HSA's for each of us (maxed out to the then contribution limit) a Deductible IRA (that was about 6K) (that was the first time I contributed to my regular IRA and not a ROTH since the Roth's came on the scene in the mid 90's -- but it was a 6K deduction...I think the Self-employed tax (i was working as a consultant part time) also kicked in...bottom line was I came up with about 23 K in deductions that dropped my MAGI from about 82 to 59K....if you are close, it is definitely worth looking into...and it took some studying of the tax code but it was worth it...
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Old 01-14-2020, 05:37 PM   #84
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Our FA has us living off cash this year and maybe doing small Roth conversions (at 10% tax rate)- but to keep us $30,000 and under so I would get full subsidies and even subsidized cost sharing with the ACA. Not sure how this is going to work. This is our first year without a paycheck. Husband retired and is on Medicare and I am retired but not Medicare eligible yet. Right now paying $545 per month for retiree medical insurance- a POS policy. ACA for a silver plan for me would be $103 per month- an EPO policy.
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